July 28, 2010 / 4:29 PM / 10 years ago

UPDATE 1-Vedanta defends human rights record after protests

(Adds details, quotes from meeting)

By Eric Onstad

LONDON, July 28 (Reuters) - India-focused Vedanta Resources Plc defended its human rights record on Wednesday at a shareholders’ meeting where some fund managers joined pressure groups to protest over its plans to build a bauxite mine in an area sacred to indigenous people.

London-listed Vedanta denied that building a mine to extract the raw material to make aluminium in India’s eastern Orissa state would harm the indigenous Dongria Kondh people.

The mining site is located in an uninhabited area so no one will be displaced, but the project will help lift the poor Kalahandi district out of poverty, Vedanta Chairman Anil Agarwal told the meeting.

“Kalahandi is one of the most underdeveloped districts in India, suffering from child malnutrition, high infant mortality rates and lack of schooling and healthcare,” he said.

“We are committed and sensitive to the social and cultural aspects of the region and would do whatever is required to meet the needs of local people.”

Some fund managers expressed unhappiness that Vedanta had ignored a critical review saying the firm had not followed guidelines of the OECD and called for greater independent representation on the board.

“You clearly have not engaged in the (OECD) process,” said Steve Waygood, an official with asset manager Aviva Investors, part of insurer Aviva Plc.

BALANCING ACT

To show its concern over the bauxite mining project and other issues with the company, Aviva before the meeting said it planned to vote against three resolutions at Vedanta’s meeting, regarding the annual report and accounts, the remuneration report and the reappointment of the board member who chairs the health, safety and environment committee.

Poor countries such as India face a difficult balancing act in seeking to promote economic development while also protecting the environment and indigenous peoples, said Vedanta board member Naresh Chandra.

“It is very difficult for a hungry person to appreciate the beauty of nature,” he said.

India’s Environment Ministry on June 30 ordered a new panel to investigate whether Vedanta’s planned mine could impact local tribes and wildlife.

A report on Vedanta submitted to the environment ministry in March said company was violating environmental guidelines and had not taken adequate consideration of the impact on the Dongria Kondh people.

Vedanta has also been criticised for the collapse last year of a chimney at a power plant owned by a subsidiary that killed around 40 people.

The vice president of Vedanta’s Bharat Aluminium Co and two other officials were charged with homicide. (Editing by David Holmes)

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